Let me begin by saying that I am no fan of government bailouts to industry. It always seems to help the big guy without regard to the little guy.
That said, I have witnessed first-hand the death of an industry in a factory town. In my case it was textiles and I would like to give a preview of what an auto industry failure might look like.
The first thing we should keep in mind is the workers. Let's say they are all laid off and sent into re-training programs.
Most older factory workers are career employees. Many cannot use a computer and some do not have even a high school diploma. Sending them back to school is like teaching a fish to fly.
Now, for those that do try, even the younger generation, we will have to pay for their re-training and give them unemployment benefits as they become educated. Note that these benefits will generally be much less than their previous paycheck, taking income out of the economy.
This lack of funds will send many of these workers to food stamps, Medicaid, and other government assistance programs. The budget crunch will not afford more social workers to be hired. You will see long lines at unemployment and social service offices. Also, most of these workers will lose employer-based health care, exacerbating an existing crisis and sending more people to the ER, thus increasing health care costs overall.
Next, let's look at the best case scenario. Re-training assumes that the worker will find a job to replace the one they lost. Most workers go to a local community college with few programs offered. Computer Science is the most profitable option, but again, few have the skills to succeed in that field. Most take service-related options like Horticulture, Culinary Arts, or Human Services, all expendible in the current economy.
Also, we have to address education devaluation. If 100,000 workers lose their jobs, and 10,000 successfully get a two-year degree, that makes a two-year degree the basis for hiring. We then have to think about the new generation of workers who are then at a disadvantage. In order to get a leg up on the flood of Associate Degree holders they must go for a four-year education in a time of tuition increases and tighter admission standards.
Finally, we cannot just look at the job losses from the factory. Local economies depend on these workers. Plants have vending machines that must be serviced. They have contractors who provide uniforms. They have parts suppliers. They have take-out places that deliver lunch. All of these peripheral jobs will be lost as well.
In sum, bailing out the auto industry leaves a bad taste in my mouth. But not bailing them out may cost even more. And I haven't even mentioned the higher rate of divorce, substance abuse, and suicides that come with massive job loss.
We can all agree or disagree on the particulars of this mess, but I wanted to lay out an argument from one of the little guys who have lived it.